The receivers could make the payment
Justice Banks-Smith found that the receivers were entitled to make priority distributions from the fund in accordance with section 561, describing them as being under "a statutory obligation to comply with [section 561's] terms". Although the receivers could have been excused from any obligation to make the payments, they in fact wished to make the payments and Justice Banks-Smith considered there was no reason that they should not do so.
She considered four key factors in reaching her conclusion.
No express limitation
Section 561 contained no express wording that would prevent the receivers from making the distribution.
No implied limitation
There was no implied limitation on who could make the distribution. Justice Banks-Smith noted it was common for a receiver to be appointed concurrently with a liquidator.
She also pointed to section 433, which obliges receivers or parties assuming control or possession of secured property prior to a company entering liquidation "to make particular payments for the purpose of protecting the priority of employee entitlements". She could not see why a receiver or parties assuming control or possession of secured property after the commencement of a liquidation would not similarly be obliged to make distributions under section 561.
Liquidators have no particular advantage over receivers
The liquidators argued that their statutory powers (such as the power to obtain books and information) put them in a better position to protect employee entitlements if they made the distribution under section 561. Justice Banks-Smith rejected this argument; it cannot be accepted or assumed that a liquidator will carry out distributions more efficiently than a receiver. Further, receivers also have a number of information-gathering powers under the Act. To the extent those powers might need to be expanded for a distribution under section 561, it remained possible to seek directions from the Court. A privately-appointed receiver may in any event have contractual rights under the applicable security agreement to obtain information on the company's financial position as well as access to book and records.
No inconsistent authorities
Finally, Justice Banks-Smith noted that there were no authorities relied on by the parties that were inconsistent with receivers making a distribution under section 561.
Equitable lien for remuneration and expenses
The commercial incentive for the receivers and the liquidators to fight over who would perform the section 561 distribution was the remuneration and expenses which would be earned by the officeholder in undertaking the distribution task. It appears the liquidators initially assumed that, if they received the fund, they may have been able to deduct all of their remuneration and expenses from the fund before making the distributions. Their position evolved as the proceeding progressed such that the liquidators ultimately conceded that a right of indemnity (if it were available) could only apply to work "caring for, preserving, realising and/or administering" the property the subject of ANZ's security interest. As the liquidators did not do any work that fell into that category, Justice Banks-Smith did not give it further consideration.
She instead gave detailed consideration to the receivers' entitlement to recover payment of their remuneration and expenses. Under the so-called "salvage principle", a person who has "incurred expenses in caring for, preserving or realising assets" is entitled to an indemnity out of the assets for those expenses, secured by an equitable lien. Justice Banks-Smith considered that there was nothing in the language of section 561 that prevented the receivers from exercising that right of indemnity prior to distribution. In particular, the wording of section 561 applied only to a "circulating security interest created by the company". She considered it was sufficient to note that an equitable lien was not "created by the company" to find that such a lien would not be affected by section 561. The receivers were accordingly entitled to a lien in respect of their "remuneration and expenses incurred in relation to the realisation [of the fund]" and to recover the amount subject to the lien prior to making the distribution under section 561.